The nominee, Richard Cordray, was rejected after Democrats failed to achieve the 60 votes they needed to move his nomination forward. The vote was 53 yes, 45 no.

President Obama left open the option of a recess appointment, although Republicans have thwarted that tactic recently by staying in rump sessions.

“We are not giving up on this,” he said. “We are going to keep on going at it. We are not going to allow politics as usual on Capitol Hill to stand in the way of American consumers’ being protected.”

Senator Mitch McConnell of Kentucky, the Republican leader, said his party had made clear for months that it would not approve a leader for the watchdog consumer agency until the law that established it was amended.

Until three changes are made, he said, “We won’t support a nominee for this bureau — regardless of who the president is.”

One of those changes would put a board in charge of overseeing the bureau instead of the director, abolishing the post. Others would subject the agency to the Congressional appropriations process, giving lawmakers more sway over its policies, and would give other financial regulatory agencies a check on its rules.

Senator Sherrod Brown of Ohio, a Democrat, said that the opponents’ “first loyalty is to Wall Street banks.”

The agency can accomplish part of its mission, the protection of consumers from unscrupulous lending practices, without having a director in place. But some of its new powers are vested by law in the director, so it could not expand into realms like the regulation of payday lenders and other nonbank financial businesses.

The power struggle between the financial sector and its check-cashing, card-carrying customers has developed into one of the fault lines along which the political parties are playing out their own rivalries as the election year arrives.

Previous opposition from Republicans led to the withdrawal of Elizabeth Warren from consideration for the post. She is a Harvard law professor who was the driving force behind the agency’s creation and is now a Democratic candidate for the United States Senate in Massachusetts.

Opposite her, in ideological terms, are those in Congress who say the real problem is not so much the need to regulate the financial world as to rein in the Washington regulators.

“This is not about the nominee, who appears to be a decent person and may very well be qualified,” said Senator Orrin Hatch, Republican of Utah, according to the Associated Press. “It’s about a process that is running out of control.”

Senator Harry Reid of Nevada, the majority leader, called it “the first time in Senate history a party blocked a qualified nominee solely because it disagrees with the existence of an agency that was created by law, through a bipartisan vote.”

Democrats have accused the Republicans of reneging on the painstakingly wrought compromises that brought the consumer board into existence as part of the Dodd-Frank financial reform law of 2010.

Mr. Cordray, a five-time Jeopardy champion, is a former attorney general of Ohio noted for his aggressive investigations of mortgage foreclosure practices. Currently in charge of enforcement at the consumer agency, he was nominated in July to lead it.

In his confirmation hearings in September, he told a Senate committee that he would make it a priority “to streamline and cut back” a mountain of burdensome regulations that discourage banks from lending to consumers. But that stance, intended to reassure Republicans on the committee, did not mollify them. At a time when Congressional Republicans have been opposing most of the administration’s approaches to regulations, the economy and presidential appointments, Mr. Cordray’s prospects were never better than bleak.

President Obama, in a speech in Kansas this week on economic policy that was laden with populist overtones, singled out Thursday’s Senate vote for attention and said he would veto any legislation undoing consumer protections in the world of finance.

“Does anyone here think the problem that led to our financial crisis was too much oversight of mortgage lenders or debt collectors? Of course not,” he said.

“Financial institutions have plenty of lobbyists looking out for their interests,” he said. “Consumers deserve to have someone whose job it is to look out for them. I intend to make sure they do, and I will veto any effort to delay, defund or dismantle the new rules we put in place.”

This article has been revised to reflect the following correction:

Correction: December 8, 2011

Because of an editing error, an earlier version of this article incorrectly reported the Senate’s vote on Richard Cordray’s nomination was 55 yes, 45 no. The vote was 53-45.

Article source: http://feeds.nytimes.com/click.phdo?i=c0754785bbb12bfe975bdf9d6a28f07c